Wednesday, August 4, 1999 Published at 14:55 GMT 15:55 UKUKBattle over licence fee futureThe proposals might suggest that some parts of the BBC are privatisedBy Media Correspondent Torin Douglas

The broadcasting world is gearing up for a political battle over the future of the BBC licence fee.

On Thursday a government advisory panel, chaired by the economist Gavyn Davies, will publish its recommendations.

They are expected to include proposals for an increase in the licence fee for viewers with digital television, to help pay for the BBC's new digital services such as News 24, BBC Knowledge and BBC Online - and the switch of BBC One and BBC Two into widescreen digital format.

TV companies fight 'digital poll tax'

The licence fee could increase by £19 or more for viewers with digital TV

The plans have already provoked controversy. ITV, BSkyB and the cable TV companies have joined forces to fight the proposals, putting aside their normal rivalries to form an unprecedented alliance.

They say the extra payment - around £19 a year, if leaks from the panel are correct - could discourage viewers from switching to digital TV, and have launched a campaign to fight the plans. The Sun - like BSkyB, part of Rupert Murdoch's empire - has attacked the increase as "a digital poll tax".

The BBC, which says it needs an increase in its income and believes the digital licence fee is the fairest way to do it, is bringing out its big guns for tomorrow's launch. The director general Sir John Birt is returning from holiday to argue the Corporation's case, along with top advisers.

But though the digital licence fee plan has grabbed the headlines so far, leaks suggest the panel's report is likely to put forward several other controversial proposals for adding "buoyancy" to the BBC's income.

Unions oppose sell-off

They include the possible privatisation of BBC Resources, the division which runs the studios, camera crews and other technical facilities, and the sell-off of 49 per cent of the BBC's commercial arm, BBC Worldwide.

Both proposals are strongly opposed by the broadcasting unions and are likely to be resisted by the BBC's management.

The panel has also been looking at whether pensioners and other groups should pay a lower licence fee, as people living in sheltered housing do at present. The idea - which would cost the BBC millions of pounds, or require other licence-payers to pay a higher fee - is likely to be rejected.

But the panel is expected to recommend that the blind should pay only half the normal licence fee, on the grounds that they get far less value from their television than other people.

Supplementing the licence fee

Sir John Birt returned from holiday to argue the BBC's case

But why does the BBC need more money? When the Culture Secretary Chris Smith set up the Davies review panel, he said it should look at ways of supplementing the licence fee "to ensure the BBC continues to enhance its public service broadcasting remit".

He said: "The BBC must continue to be seen as a benchmark for quality, provide something for everybody, inform, educate and entertain, operate effectively and provide value for money, and reflect the diversity of the UK in its role as a cultural voice for the nation."

The problem for the BBC is that the income of commercial broadcasters - from advertising and pay-TV services - is rising much faster than the licence fee. The fee - now £101 - has been pegged to inflation in recent years and is due to rise by less than that in the next two years.

The government itself will not be responding immediately to the panel's report. It says the review will be the starting point for a widespread public consultation on the future of the BBC's funding, and it will not take any decisions until the autumn.